After a busy year spent securing exclusive streaming deals and producing original programming, Netflix is stretching its muscles again by getting into the awards game — sort of. The service will honor the viewing habits of its members with the Flixies Awards, which features nominees culled from the service’s most popular streamed selections (and also Netflix’s original series House Of Cards). Categories for the inaugural edition include Best Hangover Cure, Best PMS Drama and Best Tantrum Tamer and aim to reflect the way people consume Netflix content. Voters can also write in categories for possible inclusion in future Flixies. Voting is open to Netflix customers and online visitors from any of the 40 countries and the Netflix Facebook page (check out the main page here). Voting ends March 10, with the top three winners from each category announced the next day. Here are the nominees: READ MORE »
CEO Reed Hastings says the original series “met all of (our) expectations” in becoming “a great success”, although he offered no concrete data to analysts today at the Morgan Stanley Technology, Media and Telecommunications Conference. House Of Cards, the political drama from Media Rights Capital, should be seen as “confirmation of the thesis that we can build something really important.” Its full value in leading people to subscribe to Netflix will become evident when the next season is available. “In the beginning you’re developing a foundation,” Hastings says. Still, he urged investors not to focus too much on House Of Cards‘ performance. “It’s our most viewed content today, but it’s not the center of the company. It may be the center of the PR for a while. That’s OK.” While he doesn’t want people to “think of us as the original content company,” Hastings made it clear that originals will be key to its growth. He talked up Hemlock Grove, a horror show that Netflix will offer in April. “It’s completely different” than House Of Cards, he says. “For many people in this audience, you’ll be grossed out. We’re going to push the boundaries.”
Here’s an early indication that Netflix‘s high-profile bet on original programming will pay off. About 86% of subscribers say that political drama House Of Cards starring Kevin Spacey makes them less likely to cancel, according to a survey last week conducted by investment firm Cowen and Co. That could be important for Netflix. It’s easy to cancel the service, so execs know they have to keep customers excited. But be sure to take the survey results with at least a little grain of salt: the sample size is small. Only 346 of the 1,229 U.S. consumers surveyed on February 12-13 are Netflix customers, although another 223 are classified as non-subscribers who have access to a Netflix subscription. About 10% of subscribers and those with access to Netflix viewed at least one episode of House Of Cards in the first 12 days after it became available. The average person who tuned in watched six episodes over that period, but 19.4% watched all 13. Viewers were impressed: 36% called the series “exceptional” while 43% deemed it “good.” Despite the small sample size, “if future original programs are as successful as House Of Cards, it likely leads to a stickier subscriber base over time,” says company analyst John Blackledge.
The Dish Network chairman says he missed the boat with his strategy for Blockbuster: He told AllThingsD’s “D: Dive Into Media” conference today that he bought the video chain out of bankruptcy because he wanted to use the stores to sell a new wireless broadband service he’s developing. But that became moot when his effort took longer than he envisioned. Meanwhile, “we were too late” to the streaming business. “Under the radar [Netflix] got critical mass and [now] can buy any program that they want to,” Ergen says. “We didn’t have the guts to buy the content and start from scratch.” That doesn’t mean Amazon’s streaming service is doomed. “They both can be successful….Amazon can subsidize it.” But Ergen says he’s a “fan” of Netflix and its business model. The financing of the original series House Of Cards was “brilliant…I feel stupid that we didn’t think of it first.” The man behind the Hopper ad-skipping DVR — being challenged in court by broadcasters who say it violates their copyrights — also got some laughs by noting that Netflix has no commercials. “They’re not getting sued. You can watch 60 Minutes in 40 minutes.”
Up to now execs at cable networks such as Nickelodeon that syndicate their kids shows to Netflix say the streamed viewing doesn’t cannibalize conventional TV watching. But we’ll see whether they’re as forgiving in December when Netflix introduces its first original kids show, Turbo: F.A.S.T. (Fast Action Stunt Team) – based on DreamWorks Animation‘s upcoming theatrical film Turbo – in the U.S. and 40 other countries. “Netflix boasts one of the largest and fastest-growing audiences in kids television,” DreamWorks Animation CEO Jeff Katzenberg says. “They pioneered a new model for TV dramas with House Of Cards, and now together, we’re doing the same thing with kids’ programming. DreamWorks is thrilled to be part of the television revolution.” Netflix’s Chief Content Officer Ted Sarandos says that ”creating an original series for kids was a natural for us. And we’re doing it in a big way by adapting Turbo, this year’s DreamWorks Animation summer tentpole movie.” The announcement comes as the studio’s movies shift from HBO to Netflix for showing in the premium TV window.
EXCLUSIVE: Gaumont International Television and Netflix may soon be re-teaming for a drama series about notorious Colombian drug lord Pablo Escobar. GIT is producing one of Netflix’s first original series, Eli Roth’s monster thriller Hemlock Grove, which premieres April 19. Now the U.S.-based production arm of European feature studio Gaumont has teamed with another feature director, Brazilian-born Jose Padilha, for Narcos. The series will chronicle the life and death of Escobar, the ruthless boss of the Medellin Cartel and a known terrorist who was also a congressman, a family man and revered by the poor as a new Robin Hood. Padilha, on whose idea the project is based, is slated to oversee and direct the 13-episode first season, which is eying a 2014 debut on Netflix. Doug Miro & Carlo Bernard (Sorcerer’s Apprentice) are writing. Eric Newman (Children Of Men) will executive produce.
BEVERLY HILLS, Calif., and MIAMI, Feb. 5, 2013 — Netflix, Inc. (Nasdaq: NFLX) and Flavor Unit Entertainment, the production company owned by Queen Latifah and Shakim Compere, today announced an exclusive licensing agreement for movies in the U.S. In the first-look deal, Netflix will have its pick of movies that will debut on the world’s leading Internet television subscription service shortly after their theatrical release from the company that produced box office hits like “Bringing Down the House” and “Beauty Shop”. Beginning in Spring 2013, Netflix members can exclusively enjoy Flavor Unit titles including the thriller, “House of Bodies”, starring Terrence Howard and Peter Fonda and “Percentage” starring Ving Rhames, Cam’ron and Macy Gray.
Several analysts are scratching their heads over today’s 6% gain in Netflix‘s stock price on a day when the Standard & Poor’s 500 fell 1.2% and the Dow Jones Industrial Average was down 0.9%. Could it be a reaction …
This is a clever marketing move for the streaming service, which costs $7.99 a month in the U.S. Netflix says this morning that for the month of February it will enable non-subscribers to see the first episode of its …
About $225M of the proceeds from the $500M offering it announced today — senior notes due in 2021 paying interest at 5.375% a year — will be used to retire the company’s $200M in 8.50% senior notes that are due in 2017. But with Netflix‘s new original series, House Of Cards, making its debut on February 1, some investors wonder whether the company needs the remainder to help it handle its steep content payment commitments. Some $2.3B of Netflix’s $5.6B in streaming content obligations will come due in the current fiscal year, Wedbush Securities’ Michael Pachter says. The new debt, he believes, “is necessary to solve near-term cash flow problems, and indicates the low likelihood of positive cash flow for the year.” Netflix’s debt, along with its investments to expand overseas, make it “a risky investment.” Moody’s Investors Service also considers Netflix’s new debt to be risky, giving it a Ba3 rating. The debt assessment firm believes that some of the cash will be used to pay for “investments in original programming, which require more up-front cash payments” than library titles. Despite their concerns, shares in the home video company closed today at $169.12, +4.3%. They’re up 63.8% since last Wednesday, when Netflix reported better than expected year-end earnings.
Listen to episode 20 of our audio podcast Deadline Big Media With David Lieberman. This week Deadline Executive Editor Lieberman and host David Bloom discuss Wall Street’s wildly different responses to Apple and Netflix earnings announcements; whether Fox should create a national sports network; and a very bad week in the business of games.
UPDATE, 1:58 PM: Wall Street apparently believes that Netflix is worth $2.4B more today than it was yesterday. Investors drove the stock price up 42.2% to $146.86, giving the streaming company a market value of $8.16B. It’s the biggest-ever one-day gain for the company, which went public in 2002, and it’s Netflix’s highest closing price since September 16, 2011. The company hit its 52-week bottom on September 12, 2012 when it closed at $53.80.
“There’s still an echo and a bruise” from summer 2011 when Netflix infuriated customers by splitting the streaming and DVD rental operations — dramatically raising the price for those who wanted to continue to receive both services — CEO Reed Hastings told analysts this evening. The strong subscription numbers from the last three months of 2012 show that “we’re out of jail” in consumers’ eyes. He adds, though that “we still have a year and a half of probation.” That may be one reason he didn’t want to touch a question about whether Netflix might raise its price — something that would please investors. “We’re happy at $7.99 [a month] and not speculating about the future,” Hastings says. He’s upbeat about general trends, though. For example consumers’ growing interest in tablets and Internet-connected TVs is “very helpful to us.”
Shares are up more than 30% in after-market trading following the company’s report of a Q4 profit — in contrast to the Street’s expectation for a loss. Netflix reported net income of $7.9M, down 77.6% vs the period last year, on revenues of $945.2M, +8%. Analysts expected revenues to come in lower at $934.1M. But the profit number was the big surprise: It amounts to 13 cents a share — a contrast to forecasts for a 13 cent loss. Investors also will be surprised by the subscription numbers. Netflix ended 2012 with 27.15M domestic streaming customers, an increase of 2.05M vs the previous quarter. That’s well ahead of company guidance, and analyst predictions for a 1.7M increase. International also was strong with 6.12M subscribers, +1.81M — beating the company’s most optimistic forecast for +1.44M. The good news extended to domestic DVD rentals. Netflix says 8.22M people subscribe, a loss of 380,000; the company had said it might lose at least 458,000. “The fact that our growth remains this strong despite intensifying competition, and our already substantial U.S. market penetration, underlines the large opportunity ahead,” CEO Reed Hastings and CFO David Wells say in their quarterly note to shareholders.
Lilyhammer‘s second season is currently filming in Oslo and Lillehammer, with star and exec producer Steven van Zandt on hand after taking a break from his touring schedule with Bruce Springsteen. For its second outing, the fish-out-of-water dramedy has added Paul Kaye (Game Of Thrones), Erik Madsen (Da Vinci’s Demons), Amy Beth Hayes (Mr Selfridge) and Jakob Oftebro (from foreign-language film Oscar nominee Kon-Tiki). Lilyhammer was a hit when it premiered in Norway in January 2012, drawing record numbers for NRK1, and it was the first original series to launch on Netflix when it bowed via the streaming service in the U.S., Canada and Latin America in February. Season 2 sees van Zandt’s mob fixer Frank Tagliano still in witness protection and juggling fatherhood with running his criminal operation. Added to the mix this season are a group of English soccer hooligans, a bank robbery that threatens to reveal Frank’s identity, and a bloodthirsty new female sheriff.